Securities and Exchange Board of India (SEBI): While adjudicating a proceeding against the Noticees over allegation of violating the several provisions of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (‘PFUTP Regulations’) in relation to trading activities in the shares of Hemo Organic Ltd. (‘HOL’), The bench of Asha Shetty (Adjudicating Officer) held that, due to the absence of crucial information, particularly the missing YouTube videos and insufficient link between the alleged acts and trading behaviour, the violations could not be established. The Adjudicating Officer emphasised that the material available on record was not sufficient to ascertain whether the Noticees disseminated misleading information in the scrip of HOL to public through video on YouTube channels viz. “Money Wise” and “The Advisor”.
Initiation of proceedings before the Securities and Exchange Board of India (‘SEBI’) were triggered by concerns of price and volume manipulation in HOL’s shares through allegedly misleading YouTube videos.
Background:
An anonymous complaint was received by the Bombay Stock Exchange (‘BSE’) on 07-06-2022, alleging price manipulation and offloading of shares of HOL by persons linked to the company’s promoter; the complaint further alleged that misleading YouTube videos were uploaded on channels “Money Wise” and “The Advisor” on 04-06-2022 to induce investors.
SEBI conducted an investigation and divided the period into two phases: a Price Rise was observed from 27-05-2022 to 13-06-2022, wherein the scrip rose from Rs 39.60 to Rs 74.35 with unusually high trading volumes; this was followed by a Price Fall from 14-06-2022 to 13-07-2022, during which the scrip fell sharply to Rs 32.95, causing losses to investors while suspected entities offloaded shares. The investigation further found that the Noticees were connected entities who executed trades during that period, prima facie violating PFUTP Regulations.
The Noticees argued that SEBI’s proceedings should be kept in abeyance, since the writ petition challenging the search and seizure of their electronic devices was pending before the Gujarat High Court; they also sought inspection of additional documents and multiple adjournments.
SEBI stated that no stay had been granted by the High Court and, hence, adjudication would continue; the evidence, including unusual price-volume movement, connection with other market participants, and circulation of misleading information, established a case of manipulation.
Analysis and Decision:
The Adjudicating Officer concluded that while there was some evidence suggesting coordination and intention to promote HOL scrip, the absence of the actual videos and a verifiable link between the videos and market activity made it impossible to conclusively establish violations of provisions of Regulation 3 and 4 of PFUTP Regulations. The Adjudicating Officer further noted that, in the absence of contents of the video, it could not be ascertained whether it carried any misleading information.
The Adjudicating Officer relied on its 2019 decision in Price Waterhouse & Co. v. SEBI, wherein it was held that fraud could not be proved only on alleged gross negligence, carelessness or recklessness as amounting to collusion and connivance on a preponderance of probabilities. It was further observed that, even though the investigation had found trail apparently leading to the said video, the same did not prove that the trail resulted in the circulation of video with the same content.
The Adjudicating Officer emphasised that there was no evidence that the investors were misled by the alleged video, or whether those who were subscribers of the channel had viewed the alleged video and had traded based on the same. Therefore, in the absence of such crucial information, the Adjudicating Officer, while disposing of the proceedings against the Noticees, held that the material available on record was not sufficient to ascertain whether the Noticees disseminated misleading information in the scrip of HOL to the public through videos on YouTube channels viz. ‘Money Wise’ and ‘The Advisor’, as the violations against the Noticees did not stand established.
[In the matter of Hemo Organic Ltd., Adjudication Order No: ORDER/AK/RK/2025-26/31601-31602, decided on 19-08-2025]
